Vertical farming and the bad business plan

Vertical farming and the bad business plan

It has come to the attention of many that a number of vertical farming operations are failing.

A recent article by Adele Peters in Fast Company looks into the causes.

Her analysis is fascinating and insightful, although I think the problem can be explained in more basic terms: bad business plans.

A good business plan is easy to describe, though hard to enact. You decide that you are going to bring a product—say, leafy greens—to the market. You sit down and calculate how much it will cost to produce one of these items and how many of them you can sell at what price.

Cost analysis includes everything: labor, utilities, real estate, raw materials, transportation, bribes to certain officials (in some countries). Price calculations must factor in the prices of competing products: is your head of romaine going to be cheaper and/or significantly better than what’s already out there?

It is going to cost you a certain amount of money to start your enterprise: startup capital. You will also need money to keep the operation going until it reaches breakeven and then profitability. This rarely occurs in the first two or three years.

The success of your business will depend on the accuracy of your business plan. Some experts say that if you projected reaching breakeven in year 5 and you got there in year 2, your business plan is a failure, because you don’t understand your own market.

Continue reading.

Courtesy of Aerofarms



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